What is a show cause letter?

Terms of Use

The legal framework behind show cause letters

A show cause letter provides an opportunity to respond

Employers issue show cause letters to give employees an opportunity to respond to potential disciplinary action. It is related to the obligation of employers to afford their employees procedural fairness.

To answer ‘what is a show cause letter?’, you need to consider the legal framework for show cause letters within Australia. Looking at the answers to the following five questions helps to understand the legal framework:

1. Why employees are asked to ‘show cause’?
2. What should a show cause letter contain?
3. Who can issue show cause letters?
4. When are show cause letters issued?
5. How are show cause responses used?

1. Why are employees asked to ‘show cause’?

So, why are employees asked to ‘show cause’?

Fundamentally, it is about procedural fairness. A show cause letter is about an employee being given an opportunity to respond to proposed disciplinary action. It is particularly important when termination of employment is being contemplated by an employer.

In Australia, if an employer fails to give an employee a chance to respond to proposed disciplinary action, their decision may be reversed, and compensation ordered.

The Fair Work Act 2009 (Cth) covers most employees in Australia. Under section 387(c) of the Fair Work Act, failing to give an employee an opportunity to respond may see a dismissal labelled harsh, unjust or unreasonable. The law states:

387 In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) …

(b) …

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and …

The Small Business Fair Dismissal Code also refers to giving employees an opportunity to respond to the reason or reasons for dismissal before the employee is dismissed.

The idea that employers should give employees an opportunity to respond to proposed disciplinary action is well established in Australia. In the case of Wadey v YMCA Canberra [1996] IRCA 568, two relevant aspects of this obligation were identified:

“The first is that the employee must be made aware of the allegations concerning the employee’s conduct as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.”

Even though that statement of principle is approaching three decades in age, it remains relevant.

So, as can be seen, employers have good reason to issue show cause notices before making disciplinary decisions. The failure to issue a show cause notice can see decisions overturned and claims for damages being successful.

2. What should a show cause letter contain?

Remembering that a show cause letter is about procedural fairness, it stands to reason that if it is deficient, the employee may suffer some unfairness.

So to understand what a show cause letter should contain, it will help to return to section 387 of the Fair Work Act:

387 In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and …

It can be seen that the opportunity to respond contemplates the employee being informed of the reason (a valid reason) why their employment may be terminated.

Typically a show cause letter contains the following information:

• the potential disciplinary action (such as termination) that may result if the employee does not ‘show cause’;
• adequate particulars of the alleged underperformance, misconduct, or other issue giving rise to the potential disciplinary action. This may necessitate identifying the dates, times, places, and people relevant to the allegation;
• reference to, or disclosure of, the evidence relied on by the employer that is sufficient to allow a fair opportunity to respond;
• any relevant workplace history or background (i.e., previous warnings) the employer may take into account when deciding the outcome; and,
• information about how the employee is to respond, as well as any other rules (such as confidentiality) that may apply to the process.

It is often a source of contention whether an employee should be provided with witness statements or the identities of witnesses, either during a workplace investigation or when a show cause notice is issued. What will be procedurally fair will depend on all the circumstances, including the law that applies, any industrial instruments, as well as internal policies and procedures.

3. Who can issue show cause letters?

The question of who can issue show cause letters may seem unimportant. It may not be a real question to consider in most cases. Yet, in some cases, however, it does matter.

In any business or organisation, procedures are put in place for different employees to perform different roles. In some circumstances, specific delegations are necessary for a disciplinary process to commence. As such, disciplinary proceedings may be taken in a way that gives rise to a question as to whether they have been validly commenced or continued.

For example, in the case of Zink v Townsville Hospital and Health Service [2019] QIRC 181, the Queensland Industrial Relations Commission ordered a show cause notice to be withdrawn on the basis it had been improperly issued. The Townsville Hospital and Health Service in that case conceded that the delegation for the person who issued the show cause letter ought to be withdrawn and a new delegate to oversee the disciplinary process appointed.

Another example is the case of Blows v Townsville City Council [2016] QIRC 066. That case involved consideration of whether the termination of employment following a show cause letter was invalid based on improper delegation of the Chief Executive Officer’s powers. In that case, the show cause letter issued to the employee was found to be deficient. Also, his subsequent dismissal was unfair, resulting in his reinstatement.

These cases highlight that it is sometimes necessary to reflect on the question of ‘who can issue show cause notices’.

4. When are show cause letters issued?

The issuing of show cause letters can occur at different stages:

• It may be while an employer is still investigating the issue. In that situation, the employer is usually flagging the issue and giving the respondent an early opportunity to respond to the allegation. In such cases, the respondent may be asked at the same time address the potential disciplinary consequences if it is accepted. This form of show cause letter is more typical of the opportunity to respond given to employees in small businesses.
• Another point may be after an allegation has been investigated and factual findings made. The respondent may be asked to show cause why a disciplinary decision should not follow the findings of the workplace investigation.
• Yet another point may be after an allegation has been investigated but before factual findings are made. In such situations, the respondent may be asked to show cause why particular factual findings ought not be made. Following that response, a second show cause letter may be issued relating to the proposed disciplinary consequences, such as dismissal. This two-stage show cause process is common in the public sector.

Quite obviously, how a show cause notice reply is crafted will depend on the point at which it is received.

No matter the stage at which a show cause letter is issued, it should always be issued prior to a disciplinary decision. If a decision has already been made to discipline or dismiss the employee, then there is no real opportunity afforded to put their case forward.

5. How are show cause responses used?

For an employee, often the aim of a show cause notice reply is to convince an employer not to take certain action against them. The two main purposes of an ‘opportunity to respond’ were summarised in the case of Dover-Ray v Real Insurance Pty Ltd, (2010) 204 IR 399 at paragraph [85]:

“In cases where an employee’s conduct is involved, this opportunity serves two purposes. Firstly, it gives the employee the opportunity to demonstrate that the allegations have no foundation. Secondly, it gives the employee the opportunity to persuade the employer that, while the allegations are of substance, there are factors that should persuade the employer not to terminate the employment. Those factors may be extenuating personal circumstances or they may involve undertakings about future conduct.”

Practically, an employer may have an obligation to investigate issues raised by the employee as part of their response. While employers are “not required to have the skills of police investigators or lawyers” (Schaale v Hoechst Australia Ltd (1993) 47 IR 249 at page 252), if a response raises important witnesses or evidence, reasonable steps to investigate such matters may be expected.

Show cause letters may be relevant to any claim someone wishes to bring in a court or tribunal. This can be a double-edged sword. While a well-argued response may assist someone in advancing their claim, such as an unfair dismissal claim, the opposite may be true where a response fails to raise certain arguments or important evidence.

It is critical to understand that show cause responses may also be used in a number of other ways. For instance, it may be disclosed or disclosable to professional regulatory bodies or law enforcement agencies. This may make issues such as the privilege against self-incrimination relevant. This again highlights why it is prudent for people to get legal advice as early as possible.

Have you received a show cause notice?

Important considerations

Show cause letter response options

If you have received a show cause letter, it is important to look ahead and consider the question ‘what may happen next’? Understanding what comes after a process started by a show cause letter can give you a clearer idea of your show cause letter response options. This includes:

1. Obtaining advice and guidance
2. Challenging the process
3. Challenging the allegations
4. Initiating ‘without prejudice’ negotiations
5. Arguing for lesser consequences

Anderson Legal assists executives and employees across Australia who have been issued a show cause notice. This firm provides tailored advice and guidance on how to navigate the situation.

Replying to a show cause notice

A show cause notice reply presents both risks and opportunities. As the respondent, often the main risk you are facing is potential disciplinary action that has reputational, professional, and financial consequences. However, your response also presents you with an opportunity to ‘clear your name’ and move forward.

If you need to respond to a show cause notice, there are six steps that can help you to do so effectively:

1. Review relevant laws and policies
2. Gather supporting evidence
3. Identify what you accept or reject
4. Consider your rights and options
5. Get advice from a lawyer
6. Respond calmly and purposefully

Work can be one of our defining characteristics, or at least play an important part in how we perceive ourselves. If you receive a show cause letter, it is critical to seize the opportunity to put forward a compelling and convincing response to it. Anderson Legal assists executives and employees who face possible dismissal and wish to put their best foot forward.

Why you should avoid show cause letter templates

The primary objective of a response to a show cause letter is to persuade. More specifically, to persuade the employer to a particular outcome. This is best achieved by responses that are tailored to the specific circumstances. However, while emphasis may be placed on bespoke responses, it is possible to identify common threads amongst effective responses.

In order to understand why you should avoid using show cause letter response templates, it assists in looking at five issues:

1. Templates for show cause responses
2. Why the message must be clear
3. Addressing allegations and issues
4. What makes for a compelling response
5. Ways to conclude a show cause letter response

There are no shortcuts in how to respond effectively to a show cause letter. It takes proper analysis of all the relevant facts, an understanding of the workplace environment, and an awareness of the applicable laws and policies. No generic template or response created by artificial intelligence will likely cut it.

Have you been given an ‘opportunity to respond’?

If you have not been given a fair opportunity to respond, it is important to consider your options in dealing with an unfair opportunity to show cause. Understanding your rights and options can direct your decisions in addressing any unfairness.

It is not uncommon for people to have misgivings about the fairness of a disciplinary process they are subject to, yet not raise any issues and simply ‘hope for the best’. It can be driven by the belief that raising a dispute may make matters worse. While such beliefs are understandable, they can backfire. Failing to make a timely objection to something can be taken into account as being the product of disappointment with the process only in the aftermath.

Generally, though not always, the longer a process goes on the harder it is to seek alterations to it. For that reason, anybody who holds concerns about the fairness of a potential disciplinary outcome ought to seek advice from an experienced employment lawyer at an early time.

What happens in a show cause meeting?

A show cause meeting is called by an employer to allow employees an opportunity to respond to potential disciplinary action. Typically, a worker is given some notice of the issue prior to the meeting. Also, employers generally offer employees the opportunity to have a support person.

It is not uncommon for executives and employees to leave a show cause meeting feeling that they may not have done all they could to argue their case. Sometimes, employees may respond in writing instead of, or in addition to, attending a meeting.

If you are facing potential disciplinary action and have been called to a show cause meeting, it is important to understand what it may involve. This firm provides advice and guidance to workers called show cause meetings.

About Author: Andrew Anderson

Andrew Anderson has significant experience assisting people in responding to potential disciplinary action. He assists executives and employees across Australia by:

• providing advice and guidance
• drafting letters and responses
• negotiating settlement agreements
• litigating disputes in courts and tribunals